London, 3 July: A new paper, published today by the Global Warming Policy Foundation, proposes a radical new climate policy approach that offers to be the most cost-effective means of curbing CO2 emissions, while automatically adjusting the stringency of the policy to the severity of the problem.

The paper An Evidence-Based Approach To Pricing CO2 Emissions written by Professor Ross McKitrick (University of Guelph, Canada) proposes to link the level of a tax on CO2 emissions to temperatures in the tropical troposphere, and to create a 30-year futures market for tax-exemption certificates. Investors would then have long term certainty about the carbon price, and the future tax rates would incorporate all known evidence of the likely path of global warming.

If started at a low level and used to pay for income tax reductions, McKitrick’s carbon tax will be economically beneficial even if enacted unilaterally.

“If the climate models are correct, the carbon tax will rise significantly as CO2 levels rise; but if the temperatures remain stagnant or low, then the tax and its economic cost will remain low too,” said Professor McKitrick. “Either way we get the right outcome, and the market will reward industries and investors who make the most objective use of available science in forming long term plans.”

“The temperature-based procedure that McKitrick outlines in his paper would provide a strong incentive for more thorough and objective analysis of possible future developments in the climate system. It thus offers a blueprint for an evidence-based low-cost emissions policy that would also promote the cause of better understanding,” Professor David Henderson writes in the foreword to the GWPF paper.